According to (Chen, 2020), valuation is a quantitative process aimed at demarcating the credibility or value of any asset. It requires an empirical mechanism that decides fair value. Usually, an analyst measuring the value or worth of a company tests the capital structure, expectations of potential profits, the market value of the asset and its management are some of the key deliverables of this profession.
The need for real estate appraisals in the built environment
The need for valuation dates back to early 6000 BC, the concept was first introduced by the Mesopotamian tribes in terms of a âbarter systemâ.
Trade was generally done in exchange for goods and services excluding foreign currency. Whenever transactions took place, they occurred at the value of the goods and services exchanged. Deriving value from the trade was a skill that was performed by many business-oriented people.
When it comes to the built environment, civil engineers and architects play a critical role in uncovering opportunistic value. Here are the few major reasons for the importance of real estate appraisals (Adroit-Valuation, 2017):
1. To mortgage a property: While the loan for any construction of a property is taken out, for the mortgage purpose, an appropriate and explicit security is calculated, assessed and valued, only then is the loan granted to the buyer.
2. For an optimal sale and purchase of real estate: To understand the fair value of the property at the time of sale, purchase or lease, the valuation of that property or an asset is extremely important so as not to exaggerate to be overvalued or undervalued according to market trends and conditions.
3. For taxation: When calculating taxes such as property tax, wealth tax, vacant land tax, municipal tax, etc., valuation is important.
4. For acquisition purposes: Whenever a business or organization decides to auction or acquire a property, then valuation is important so that optimal values ââare decided based on various necessary factors taken into consideration.
5. For stamp duty: When transferring a property by an individual, organization or business, it is important to estimate the value of the property to analyze the stamp duty required for this process based on the value extracted.
The profession of expertise as an opportunity
During the assessment process, the first step is to understand all of the business interests of the company, organization or individual and then assess all financial analysis calculations such as the P / E ratio. , percentage of growth, dividends, equity, capital structure, future earnings etc …
Various approaches are performed, such as income approach, asset approach or market approach based on various uses and types of goods, which will be explained in detail in the following sections of the report. In addition, after all reconciliations and adjustments on the analysis obtained, the final report is prepared.
The figure mentioned below shows the progression of the number of evaluators. The valuation of land and buildings alone observed a 496% percentage increase over 45 years. Statistics clearly define the progression of architects and engineers in assessment roles.
Prerequisite skill set of an assessor
The prerequisite skill set refers to the skills that should be developed and the skills that should already be acquired before entering a job, there are different types of skill sets involved in different types of profession.
Here are some skills to learn before becoming an appraiser:
1. Communication: Having clear and understandable communication is a major skill set that an appraiser should be equipped with, an appraiser’s job is to meet different clients and sources and conduct interviews. Having a good command of the local language can be a big help in understanding the customer better and knowing what they really want. Communication is of two types Verbal and non-verbal communication for which an assessor needs to be strong in numbers and explaining it to clients with justifications.
2. Organization: The work of an evaluator will involve the management of many projects in different fields. Therefore, having an organized method to follow will be helpful in saving time and becoming more manageable, organized, and schedule aware. Developing organized day-to-day habits will be very helpful in a future career.
3. Professional skepticism: Professional skepticism means having a conscious, open mind with bubbling curiosity, in the evaluation business, questioning information provided by sources and management is a general way of understanding details. It is essential that young people make skepticism a habit in everyday life.
4. Intellectual curiosity: The sense of intellectual curiosity refers to a curiosity that leads to the acquisition of knowledge. Not having the curiosity to learn new things and new methods will lead to a decline in career because there is great progress in all areas and if we do not follow the development of nature we live in there it there will be no advancement. Having curiosity can clear up any doubts, big or small, and it will lead to questioning situations and a different approach to seeing things.
5. Entrepreneurial spirit: In the field of valuation, it is quite rare to work with the same client over and over again compared to the world of taxation and auditing where repeat clients are very frequent. So, an appraiser must be innovative and entrepreneurial to get business. If there are no or very few repeat customers, it becomes important for reviewers to find creative avenues to develop leads.
– By Amol Shimpi, Associate Dean and Director, RICS School of Built Environment.
Read: 5 Alternative Career Options For You During The Covid-19 Era
Read: The 5 best career options for science students in 2021